KRS 304.29-131: Reinsurance.

(1) A domestic society may, by a reinsurance agreement, cede any individual risk or

risks in whole or in part to an insurer, other than another fraternal benefit society,

having the power to make reinsurance and authorized to do business in this state, or

if not so authorized, one (1) which is approved by the commissioner; but no society

may reinsure substantially all of its insurance in force without the written

permission of the commissioner. It may take credit for the reserves on the ceded

risks to the exten t reinsured; but no credit shall be allowed as an admitted asset or

as a deduction from liability, to a ceding society for reinsurance made, ceded,

renewed, or otherwise becoming effective after January 1, 1989, unless the

reinsurance is payable by the ass uming insurer on the basis of the liability of the

ceding society under the contract or contracts reinsured without diminution because

of the insolvency of the ceding society.

(2) Notwithstanding the limitation in subsection (1) of this section, a society may

reinsure the risks of another society in a consolidation or merger approved by the

commissioner under KRS 304.29-141.